Integration into Global Value ChainsPolicy Discussion

Cagatay Bircan

European Bank for Reconstruction and Development

7th CompNet Workshop, Frankfurt, 12-13 December 2013

Policy ImplicationsMade in China: How Much Does It Affect Measures of Competitiveness?

I Competitiveness should be measured in value added terms.

I Non-price factors (e.g. quality and taste) should beaccounted for.

I Retain high quality intermediates production in developedeconomies.

I Future research:

I Disaggregated data on services trade.I How do we improve the quality of domestic production?

Policy ImplicationsThe Competitiveness of the European Automotive Industry

I Need for diversification of competitors.

I But maintain intra-EU competition to retain GVC incomein Europe.

I Eastern Europe should emulate Western Europe inincreasing value added...

I ... and generating more income/jobs from existing GVCs.

I Integration with China is welcome.

I Import competition from China accounts for 27% (48%) ofthe total observed increase - within and between firms - inthe share of non-production (highly educated) workers inlow-tech Belgian manufacturing (Mion and Zhu, 2013).

Policy ImplicationsTradable vs. Non-tradable: An Empirical Approach to the Classification of Sectors

I Need for a trade-weighted approach for measuring (non-)tradables.

I Delivers a continuous measure.I Takes into account import content.

I Future research:

I More disaggregation of services.I How do we classify these disaggregated services?

Future Research

I Global production gradually shifting toward developingcountries.

I Any room for SME development in both North and South?I How do we increase value added in South (e.g. skills,

R&D)?I Impact on consumer welfare?

I Policy support to answer two questions first:

I What exactly are the benefits (externalities) of locating in acertain location and not elsewhere?

I What is the cost effectiveness of policy to induce thisoutcome?

I Need to answer market failures: e.g. linkages, R&Dspillovers, best practices.

I Regional support versus industry support?

Externalities Waiting To Be Internalised?

The Case of SlovakiaDevelopment of other sectors

Source: EBRD

The Case of RussiaImportance of clusters

Source: EBRD

The Case of TurkeyImportance of clusters and proximity to Europe

Source: EBRD